No Funds For the Needy Part II (Budget 2011)

SHAH ALAM: I am not a math whiz so if I got it wrong when deciphering the 2011 Budget, please correct me!

Try as I might I cannot find any exact reference as to how much money had been allocated in full to the defence sub-sector which is part of the National Security sector.

This is the main trust of the budget:
RM212 billion is proposed for the 2011 Budget which is 2.8 per cent higher than the allocation for 2010.
Of this, RM162.8 billion is for Operating Expenditure and RM49.2 billion for Development Expenditure.

From the Economic Report, it is stated that from the total budget of RM212 billion, 2.1 per cent is allocated for the National Security sector which according to my calculations (with thanks to my better half) is around RM4.2 billion.

The figure is confusing as the Report also stated that the Development Expenditure for the National Security sector is RM3.9 billion or 7.2 per cent. This is a reduction of almost RM100 or 0.8 per cent from the same period last year (RM4 billion).

From RM3.9 billion, RM2.7 billion is allocated for the defence sub-sector with the rest for the internal security.
The report did not mentioned any particular procurement programme apart from purchasing and upgrading of equipment, expanding surveillance and enforcement capabilities and better training for uniformed personnel.

Despite the confusion on the exact allocation for defence, we can safely conclude that money will be very tight for Mindef next year. Perhaps they will be luckier when the RMK10 is announced although from the above figures, I really doubt it.

–Malaysian Defnece

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About Marhalim Abas 1187 Articles
Shah Alam

22 Comments

  1. Marhalim,

    I think most of the RM2.7 billion DE is to pay what’s due in 2011 on already committed projects such the A400M, EC725, Avibras MLRS etc.A small balance will be used to start the OPV 2nd Batch and the 8×8 AFV.Of course, the government need to support local economies, but I hope it will not completely turn a blind eye on the requirement of the RMAF for an effective Medium Range GBAD solution for its Sukhois and Hornet TUDM Bases, including the Scorpenes TLDM Base as well!

    Marhalim: I was told the A400M payments are from the Rancangan Malaysia allocation, from both the Nine and Tenth. I believe the payments for the Cougar and Avibras will also come from the Rancangan Malaysia.

  2. They can put anything they like in the RMK-10 like they did in RMK-9. We as the local defense scene observer can just wait and see how the future of the local defense will be like…

  3. Syameer and All,

    I think BNS and DEFTECH will get the 2nd Batch OPV and AFV 8×8 respectively in the 10th Malaysia Plan.Other local defence industries players such as SAPURA, AIROD, ZETRO, SMEO, SMEA,CTRM, Aero Tree, Saling Erti, Master Defence, Sydney Franklin & Sons Pte (UK), System Consultancy Svcs Sdn Bhd, CMCA, Anika Bekal, Peri Mekar and ATSC are well positioned in their respective sector as they have ongoing DE and OE contracts with Mindef.Small companies doing agency work for foreign OEMs will find the going tough as the small DE budget indicates that there will be no major procurement in 2011 except perhaps the OPV and AFV 8×8.

    In today’s Utusan Malaysia, Minister Dato Ahmad Zahid Hamidi is quoted as saying that Mindef gets RM9 billion in 2011.I think what he is referring to is the total Mindef DE and OE budget allocation for 2011.The RM4.2 billion for the Security Sector as announced by PM will probably still stands, with Mindef probably getting 50-60% of it.

    My observation is that the reduced DE allocation will have a serious impact on the combat capability development of the MAF.To start with, the lack of an effective GBAD for the Sukhoi, Hornet and Scorpene Bases will make their potential combat capability meaningless, for they can be taken out in a matter of hours.The latest deployment of Sukhois 30 (eventually it will be 18xSukhois) by our neighbour will make our Scorpenes even more vulnerable in its current base in Sabah.

    The PAT together with the PTD, PTL and PTU should speak together as one voice and advise the PM and Defence Minister of the serious vulnerability faced by our Sukhois, Hornets and Scorpenes.I have full confidence that they will do something about it, if our military leadership make clear of the need to resolve the GBAD issue before embarking on any other projects in 2011.I am sure they would do the right thing if the full facts are known to them.

    Marhalim: I believe the RM9 billion is the Operational Expenditure as the DE expenditure had been included in the Economic Report. RM9 billion sounds like a big sum but one must remember that the Armed Forces had gotten a lot of new hardware within the last three years.
    Both Datuk Seri Najib and Zahid know the problems faced by our forces…

  4. Brother, you bet Najib and Zahid know very well the character of the Military big bosses.
    It is about time that the assets within the MAF to be properly audited and reorganize befitting the budget allocated and the leaderships be more professional and accountable. They? need to look at the forces in being rather than embarking into more procurement, after all how much is their relevancy in the nation building!!! or do they want to be relevant or just be a “gold mine” as alleged by one of the military top bosses.
    Someone said of the serious vulnerability of the Sukhois-well! thought it was vulnerable right from its inception!

  5. Dear Marhalim,

    I have no doubt that the PM and Defence Minister are fully aware of the problems faced by TD, TLDM and TUDM since they would be the first to be informed of their procurement requirements through the normal bureaucracy. But these procurement lists are submitted individually by the Chiefs direct to them. So the PM and Defence Minister are informed of the procurement requirements at the level of TD, TLDM and TUDM only and not at the level of national defence.The PAT should advise the PM and Defence Minister on the order of priority based on the immediate operational defence needs. If such advice is absent, who can blame them for giving preference to locally generated projects such as the OPV and AFV 8×8 over other projects, even though they are vital to the survivability of the Sukhois, Hornets and Scorpenes.We should not be so unintelligent and foolish not to recognize the need to protect our high-value Sukhois, Hornets and Scorpenes assets from potential air attacks.They are most expensive assets and would be foolish if we do not take immediate steps to insure them.

    Marhalim: Boustead has got the LOI for 2nd Gen NGPV now called LCS. But they has not agreed the technical details yet. I am guessing that the contract will be signed at Lima next year…

  6. we will just have to make do with what we are given. If there is a 1.5 billion shortfall compared to last year, the only logical thing to do is to cold storage certain assets, while extra mobilising the other. What assets, its the best knowledge of the peop;e in the government to know hehehehehheh

    As such i doubt the 8×8 afv will get priority , not untill 2012/13 or after election. But the OPV they may kick start another 1 or two within next year.

    So i would not even dream of another MRCA nor medium range GBAD.

  7. Marhalim

    You are confused because the budget speech is for 2011 and the economic report is 2010 estimated figure.

  8. Indeed, no funds for the needy [yet again!] Marhalim…. But no surprises here, we all knew 2011 was going to be extremely tight, as far as cash allocations. Until the PM ensures that the next GE will not result in Putrajaya having new occupants, there a ZERO chance of this government awarding a major defence deal. I wish I had saved the link, but there was an online article by a local NGO who even suggested we scrap the MAF and concentrate solely on development! There are also those who believe that because a full scale conflict is very unlikely, we should put a freeze on all arms purchases!!!

    Whilst there indeed is a need for our bases to at least have a minimum GBAD capability, does the present threat enviroment justify it? We are more likely to be hit by a pirate attack in our waters or have foreign naval or fishing ships intruding our waters before our bases are hit by a surgical air strike. The MAF shopping list is long and funds are scarce, so where to start?? I believe we should start with getting the basics right and investing in gear that is presently needed to cope with EXISTING threats rather than worry about what will happen if one of our neighbours decides to wage war on us. I believe that stuff like UAVs, a Nuri replacement, arming the 6 Kedah class, etc, are more practical at present rather than medium range missiles…

  9. loreng…. As Marhalim said, the PTD, PTU, PTL, PM and Defence Minister are fully aware of what is happening with the MAF. It is not a case of the top brass not informing the political leadership. I wish I shared your level of confidence though with our leadership, honestly I don’t!!. Our political leadership continues to gamble with national security and will continue to do so.

    Making matters worse is the fact that the average Malaysian wants to hear about schools and highways being built, government aid for the needy, that basic prices of basic food commodities remain stable, that the MACC continues to apprehend the corrupt,etc,…. they dont want to hear about defence and can we blame them given that defence awareness in this country is low?

    Marhalim: A new defence policy is supposed to be made public on Nov 8. Maybe we can learn something on the direction of the armed forces in the future. I hazard to guess that the present leadership and even the opposition does not believe there a country in the region will dare to resort to war for territorial advantage or whatever. So we will end up paying for 100 storey towers and city trains…….

  10. Kosmo newspaper today 19/10/2010 Boustead annouced that the have received LOI from the govermment for 6 nos. of the OPV/LCS… Guess a piece of the cake from 2011 budget has been grabbed by Boustead…

    Marhalim: Read carefully the press release. They just signed an LOI not the LOC and Contract yet, The money for the Second Batch of the Patrol Boat project will come from the Rancangan Malaysia Ke 10 and 11.

  11. Azlan,

    Well we must not forget the modern understanding of the existence of the MAF is not to fight a war but to keep the peace.If war breakouts with our neighbour, then the MAF has failed in its function to maintain peace.
    To maintain peace with our neighbours we must have equitable military deterrence.The MAF must have defensive capability that make war a costly affair and a no-win situation for the aggressor.They must see that Malaysia has the capacity to hit back if they intend to use their military power to resolve inter-state conflicts.This concept is known as equitable military deterrence.I am afraid with our Sukhois, Hornets and Scorpenes being exposed and vulnerable to air attacks, they cease to exist as an important component of our military deterrence.
    In the absence of an effective Medium Range GBAD for their bases, the MAF can no longer be relied to keep the peace.It is a great failure in military and political leadership if the weakness is not rectified since funds are available if only they are used wisely.The equitable military deterrence capability contributes to a respectful and peaceful relationship with our neighbours which is essential to keep the peace!

  12. Azlan…. please do not spout such sensible ideas here. We must only plan for wars of an existential nature and nothing less! Simon

  13. Anyone here know what is the fate of the Ouessant class submarine which was used to train our submariners in France? I heard that it will be bring back to Malaysia and be converted as a ship museum.

    Marhalim: Yes that was the plan but I guess with the amount of money Mindef is getting nowdays I dont think they can afford to sent it back home unless some one come out with the money on behalf of the government…

  14. Marhalim, as you said, the possibility of armed conflict breaking out amongst ASEAN countries is slim, despite all the tiffs and territorial disputes.

    I would be very curious as to how Brunei, Malaysia, Vietnam and Malaysia would respond if the PRC started conducting naval patrols closer to our claims in the South China Sea or heaven forbid, if they called our bluff and declared a maritime exclusion zone, preventing us from resupplying Layang Layang. Apart from sending some Hawks and Hornets to Labuan as a show of force and complaining to the UN, there’s not a damn thing thing we can do.

    Marhalim: Thats why at the last Asean meeting they got Hilary Clinton to say that the US got an interest in SEA affairs.

  15. If the Chinese is going to use force at the Spratly Islands, then we can do nothing. Perhaps we just should pull back from the island if such thing happen there. We don’t want any conflict with the chinese nor our neighbors as we already knew that our armed forces can only handle a low to medium level conflict.

    Sending our ‘very capable’ hawk and hornet to the Spratlys island as a show of force to the chinese is for what??? Nak mati ke? The chinese have no problem to deal with this two darn tiny things. They even have many ICBM with the capability to strike as far as the US which is an absolute a show of force and the capability of deterring any type of threat.

    Marhalim: I dont think at the moment, the Chinese will do anything about the Spratlys but who knows in two or three decades when the forecasted fuel peak actually occurs then we might be in trouble…

  16. loreng, terms like ”equitable military deterrence” sound nice but is a luxury we can’t afford given the size of our budget, our longstanding tradition of wasting what funds we have and the fact that we are faced with actual peacetime threats. You’re talking about spending cash on protecting our bases with medium range SAM’s, which I concede is a valid point, when we don’t even have enough cash to spent on a fleet of UAVs to monitor our coastline or even buy decent sights in numbers for our infantyman. To monitor our coastline and EEZ we have only 4 MPA’s, only 2 of which have been fitted with AMASCOS.

    Are you seriously suggesting that we channel funds to buy gear for a very unlikely war in the future at the expense of neglecting the actual, current threats we face?? Have relations with our neighbours reached a point or is likely to in the near future, where armed conflict is inevitable?

  17. Azlan,

    Our close neighbour has demonstrated the importance of maintaining an effective military deterrence.Their leadership places great importance on the role of its armed forces in national power.Their armed forces has contributed to regional peace since no countries wants to harm them because they have superior military power (military deterrence).So we need Medium Range GBAD solutions for the Sukhois, Hornets and Scorpenes so that they are protected and continue to contribute to our military deterrence capability which is important to maintain the peaceful regional environment.As reflected in 2011 budget, we still have the means, what is needed an appreciation of the need to do things in the correct order of priority.

  18. Azlan,

    Your support on the necessity of a Medium Range GBAD solutions is noted with thanks.

    You mentioned ” a luxury we can’t afford”, but the truth of the matter is that as you have mentioned we have been wasteful, if only we are careful with our procurement spendings and in the correct order of priority we could have built some degree of military deterrence capability.

    I think it is difficult to build our Armed Forces on the basis of threat scenarios since it is no longer feasible to name a country as a possible aggressor in this time of regional peaceful coexistence.We have no option but to put aside the ‘enemy scenario’ and build an armed forces based on the ‘military deterrence capability scenario’.If we are not prepared to embark on this approach, then don’t buy the expensive hardwares to start with, but instead just concentrate on building ‘All Citizens Military Force’ where every able bodied citizens are given military training to defend the country.Yes, it could be a cheaper option to defend the country and certainly would contribute to national integration.But we cannot turn the clock, since we have bought some expansive stuffs, therefore we better take steps to insure them, otherwise we really look silly and lacking proper understanding in the art of national defence.

  19. well i get a bit confused herela when it comes to to our surveillance assets. Yes the Navy only have 4 MPA’s with 2 upgraded with what ever what but i thought the 6 Lynx also doing the surveillance job with some type of radar (i have no idea what is it). Plus the Maritime unit 3 AW139 also is capable of doing surveillance with proposed radar on it. The two Bombardier was supposedly to be fitted with some sort of surveillance radar as well i thot.

    Plus the police also got 3 super kings that i was told will be fitted state of the art elint and surveillance radar?

    Well only the people in gov jela yang tahu but i agree, long range UAV would be a welcome addition to the surveillance assets. Not that mahal but not cheap either.

    I dont think we can afford any AEWACs but maybe some surplus MPA from the Aussie who planned to retire their P3C to p8 could be good.

    Marhalim: Yes we have limited ISR assets. In fact when the police received their two Super King Airs fitted with the ISR equipment it will be one of Malaysia most advanced asset. The police are tight lipped about the exact fitting but I am told that it is similar to the King Airs purchased by Iraqi Air Force. How similar? Wallahualam.
    No we cannot buy the Aussie Orions, they are too old and in need of extensive modifications to remain in service, with the US accelerating the retirement of their own Orions it will not cheap to maintain in the long run despite claims by Lockheed. We already have a 737-800 in service but I guess it will be too much to ask them to refit it for ISR use……

  20. The MMEA’s AW139’s and Dauphin’s have radar and FLIR but they don’t have the endurance a fixed wing platform has, same as the the 6 RMN Super Lynx’s. Our main patrol assets remain the 4 Beechcraft based at Subang and I suspect the
    C-130s occasionally still do patrol work. Then there are also the 2 MMEA Bombardiers which have radar and FLIR. There was an offer many years ago for Nimrods but the operating costs would have made a hole in the budget. UAV’s in numbers, operated by a joint command…. that’s what we need.

    loreng,

    Singapore as you noted places high importance on military deterrence and they need to, more than any other SEA country, largely due to it’s size and lack of depth. Unfortunately the MAF has much more operational responsibilities, a much much larger area to cover and a much smaller procurement/operational budget. Before we talk about deterrence against external threats we should perhaps ensure that the MAF is adequately equipped to deal with peacetime threats? Do we plan on dealing with existing threats or hypothetical threats, we because we lack the political will and ringgit to do both.

    Marhalim: It is the lack of funds that I have argued before that we need to forgo any pretensions of making anything locally unless we can do something that its truly revolutionary that everyone will be knocking on our door to buy them. Spending money on things that can be purchased off the shelf is a non starter. Look at Proton it has been here for 25 years it still cant afford to manufacture cars from scratch due to the economic of scale or the lack of it. I know I am comparing apples to oranges but underlying premise is the same. We should focus instead ensuring that whatever we purchased can be sustained for 30 years not 15 years or so …..

  21. I agree with Marhalim on economies of scale. IMHO, BNS should have not embark on the SGPV project. My own estimations that based on the rough specs that were told to the public 96.5 m and 2200 tonne, plus weaponry and other associate cost, each ship could cost a minimum RM1.5 billion if build here. How do i get that figure? well for the six NGP it was rumoured final cost was RM6.6 billion, or RM1.1 billion each, with no EW delieverd, no missile, no sonar (ASUW) and no torpedo. But lets assume that RM1.6 billion initial payment to PSC that was made in 1997 was for infra cost of seeting up the jigs in lumut. if we take that out, the hull cost will be around 833 million each. Still very expensive at around USd268 per hull. As the SGPV will be at least 5% larger plus will inclusive of EW, sonar and weapons, i multiple the original NGPV cost with a multiple of 1.8( the .8 being estimates for EW,Sonar and Weapons and some extent extra space).

    That would constitute around USD484 million (minimum) per ship sail away with 1 round of weapons. Of the shelf Fremm and Horizon was quoted in the net to be in the range of USD270 to USD300 million pper ship with full compliment of weaponn. The russion strengusky that was supplied to india was quoted in the net to be in the range of USD200-250 million sail away.

    Though i may not be comparing apple to apple, the point that i am making, assuming that we pay top price of USD400 million for off the shelf battle ship, we still be saving around 18% instead of doing it here.

    Those 18% can translate into a lot of things. better socio spending or we can get some more stuffs like an MPA. Just my 2 cents

  22. Marhalim, would it be safe to assume that the German Naval Group in no longer in the running and the new partner will be DCNS? The logistics and mantainance people in the RMN are probably in for more headaches as the new design will probably have a different radar, CMS and engine. Probably the only thing the 2nd batch will have in common with the Kedah class is the 76mm gun.

    Marhalim: Yes its most probably will be DCNS. Yes it will be a different animal together and more work to certify everything, that why the new designation Littoral Combatant Ship…..Lets hope they learn the lessons from the Kedah class fiasco….

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